I have a question about 401k can you please help?

Question

i am interviewing for a new job on tuesday and am hoping i get the position. At my current job, i have a 401k plan. if i get the new job, how do i handle my 401k. although i should be more informed about how my 401k plan works, i am not. will my current employer pay me off the value of my plan. or do i have to setup something at my bank to transfer my funds. or do 401k plans follow you to next job. im not sure my question is making sense lol, i know what i mean just cant ask the question right. i dont want to be paid off because i'll get charged penalties. can my 401k plan just stay where it is and i contribute to it on my own? right now it is a payroll deduction. if i get new job can i somehow setup a payroll deduction again going into this account or do i setup a whole new 401k with new employer. if its a new account what happens to my current plan? can you please explain in easy to understand terms lol im not stupid just 401k illiterate. thanks

Answer 1

I would transfer to a new account

Answer 2

You will simply transfer from your current employer's plan to your prospective employer's plan with no penalties. It's called a rollover. The employer and their benefits admin will help you through the matter of signing a form and getting it transferred. You can leave it where you are but it's not that wise to do so. Relax. Your money will be safe either way.

Answer 3

Do NOT cash out or take a check for the value of your 401(k).  If you do, you will pay penalties, taxes, and fees and you will end up with about 60% of the total.  You can go to wherever you like (Schwab, Fidelity, Vanguard) and open an IRA.  When you do leave your job, that company will take care of "rolling over" your old 401(k) into your new IRA.  That way you will not have to pay taxes or penalties.  You would set up a new 401(k) plan with your new employer.  Each employer has their own individual 401(k) plan.